How siloed applications inhibit growth

Industry Insight

Retailers often find themselves implementing new applications and solutions to respond to new needs and demands of their business. What they fail to realize or take into account is how these new solutions tie into their existing systems. In mange cases, these solutions either don’t communicate with their other systems, or are culled together in a complicated, customized manner that usually delivers inadequate results, erasing the initial goal of the new software. Instead of improving processes, these siloed applications are actually inhibiting growth.

The retail industry is one that moves incredibly quickly, particularly for businesses that are proactive in looking to gain competitive advantages and grow. There are always new challenges on the horizon that must be addressed, and that requires sellers to be able to think on their feet and implement the most appropriate solution or strategy to deal with their issues.

While this adaptability is critical for any successful retail operations, there is also no denying that it can present new challenges as well, particularly when it comes to technology.

For example, say an online retailer deploys an online eCommerce solution designed for small retailers. A year later, the same merchant may be reaching a broader audience through a broad array of channels, ranging from online marketplaces to brick-and-mortar stores. Along the way, the retailer realizes the existing solution does not address the company’s current needs, but the fastest and least expensive way to address the problem is adding new applications and solutions. Before the merchant knows it, there is a variety of solutions and applications in place, all dealing with different channels or tasks.

The disadvantages of disparate siloed applications

The implementation of all these siloed applications may help accomplish short-term goals, but in the long run, it often creates more problems than solutions. Old software may be incompatible with new solutions, requiring workarounds and Band-Aid fixes. This can lead to retailers having to spend more time doing seemingly basic tasks, simply because different components of their technology are not working in unison.

In a worst-case scenario, these jumbles of technology may even inhibit future growth opportunities. Technology can hold companies back from operating efficiently, resulting in a worse customer experience and lost opportunities. Here are some specific issues that retailers often encounter when utilizing disparate systems:

  • Limited visibility, lack of real-time updates: When systems are not coordinated, old information may not be updated correctly or data may be redundant. All activities reliant on information, ranging from ordering new goods to launching marketing campaigns, can be negatively affected by this bad information and lack of visibility across all channels and locations.
  • Wasted time, ineffective use of resources: Siloed applications and solutions are often less efficient – it takes companies more time to do what should be rather easy tasks. Because solutions do not always play together nicely, employees are forced to do tasks multiple times or check things over and over again to ensure they were done properly. One particularly common example is inventory and product information management across multiple channels – retailers often use solutions designed for specific channels (such as eBay), and when they decide to expand to other marketplaces, they find themselves having to create listings for the same product multiple times for each channel.
  • A poor customer experience: Many customers do not care what happens behind the scenes until it directly affects them. If retailers are struggling to make heads from tails in regards to their tech solutions and there are all these inefficiencies in their operations, this will eventually trickle down down to the customer experience. For example, if there is a lack of visibility, inventory may run dry on some channels, resulting in angry customers. Or, if solutions are not communicating effectively, customer service agents may give shoppers wrong information about products or the status of orders.

The importance of integrated solutions

The retail industry continues to grow more sophisticated than ever before. Competition has never been greater, and if merchants want to turn a profit, they need to be able to operate effectively and efficiently. There is no longer any room for error, and even slight operational mistakes can negatively impact the bottom line.

Utilizing siloed applications and software can cause a lot of problems for merchants, particularly in regard to transparency and productivity. With more channels being added to the mix all the time, from mobile applications to online marketplaces, the lack of coordinate between systems will only cause more problems, particularly for young merchants looking to grow aggressively. As Forbes magazine puts it, you have to create a unified vision with a common goal.

Of course, getting everything integrated is not the easiest task – integration costs money, takes time and may even require significant system overhauls. However, it is something retailers need to consider if they want to continue to operate effectively and minimize waste and inefficiency. For retailers looking to gain an edge, the industry is simply too competitive to afford disorganized operations caused by siloed applications.